Uber Technologies Inc. (www.uber.com) is an American international transportation network company headquartered in San Francisco, California.
The company develops, markets and operates the Uber mobile app, which allows consumers with smartphones to submit a trip request which is then routed to Uber drivers who use their own cars. Uber now operates in 600 cities in 65 countries, providing more than 10 million rides each day. By the end of 2018, Uber’s market value was around US$72 billion, with expected revenues for 2018 around US$10 billion. However, since it began operation in 2012, Uber’s net income has been negative.
It is estimated that worldwide there are 75 million ‘loyal’ Uber passengers, who are served by 3 million Uber drivers worldwide, 0.75 million in the US, and 2.25 million drivers in the rest of the world.
Consumers appreciate Uber, and rival services like Lyft in the US, Didi Kuaidi in China and GrabTaxi in South-East Asia, because they tend to be cheaper than conventional taxis, cleaner and more reliable.
Uber’s freelance drivers typically pay Uber around 20 per cent of their fares. For many of Uber’s freelance drivers, flexible working hours and being spared the formalities of qualifying as a conventional cabbie are an advantage.
Uber is a case study in how to construct a ‘platform’, a digital service on top of which other businesses can be built. As it arrives in a city, it launches a vigorous recruiting programme for drivers, offering them incentives to sign up. Its fares are ‘dynamic’– they undercut conventional taxis most of the time, but go up when it rains, or when there is some other reason why demand for rides is high.
This encourages more of its drivers onto the roads when they are most needed. This in turn means that customers can always get a car quickly, even if it sometimes costs a bit more. This encourages them to keep using Uber, in turn providing lots of work for its drivers. In recent years Uber has moved into new fields and diversified its core offering, by introducing peer-to-peer rides through UberPOP,

ride sharing through Uber Pool and various levels of luxury options. Furthermore, Uber has also started funding research into autonomous cars.
Uber’s presence in cities has provoked a reaction among regulators. Taxi drivers have also taken on the company with protest and violence against Uber drivers.

Questions

1. What are the basic principles in the ‘sharing economy’?
2. Explain the competitive advantage of Uber.
3. Why is it so important for Uber to get into so many countries so fast?

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